Aon Forecasts a 10.1% Increase in India’s Medical Costs in 2027

Summary:
India’s medical costs are projected to rise 10.1 per cent in 2027, easing from 11.5 per cent in 2026 but continuing to grow faster than general inflation, according to Aon. Chronic diseases, rising demand for healthcare and advanced treatments are expected to keep expenses elevated, putting pressure on employers’ benefit budgets. The report recommends data-driven healthcare and employee benefit strategies, noting that 87 per cent of employers are likely to rely on wellbeing programmes and around two-thirds plan to use flexible benefits to manage costs in 2027.. 

India’s medical expenses are forecast to increase by 10.1 per cent in 2027, down from 11.5 per cent in 2026. However, healthcare costs are expected to continue climbing considerably faster than general inflation, according to a report released on Tuesday.

The report by professional services company Aon projected that India’s net medical trend rate, after accounting for an estimated inflation rate of around 4 per cent, will decrease from 7.4 per cent in 2026 to 6.1 per cent in 2027.

The findings suggest that healthcare expenditure will continue to outpace the overall rise in prices by a significant margin.

India’s expected medical trend rate is still higher than the Asia Pacific regional average, which is projected to ease from 11.3 per cent in 2026 to 9.7 per cent in 2027. India’s forecast is higher than China’s 6 per cent, but lower than the projected rates for Singapore (14.7 per cent), Thailand (11.7 per cent) and Indonesia (17.3 per cent).

These differences are attributed to variations in healthcare infrastructure, population demographics, disease prevalence and patterns of healthcare consumption. They also highlight the importance of developing healthcare and employee benefit strategies based on local market conditions.

“India’s slower medical trend reflects a reduction in cost pressures and better conditions across several healthcare systems worldwide,” said Ashley DSilva, Head of Health and Wealth Solutions, India, Aon.

The report highlighted that fundamental challenges remain over the long term, including the prevalence of chronic illnesses, increasing demand for medical services and wider adoption of sophisticated treatments. With domestic healthcare costs continuing to increase at more than twice the inflation rate, employers are likely to face sustained pressure on their benefits budgets.

According to the report, employers should adopt forward-looking strategies based on data, combining workforce-specific information and insurance claims analysis with market comparisons. Such approaches can help improve benefit plan structures, enhance healthcare provider networks and build workforce resilience.

Chronic diseases continue to be a major contributor to medical expenditure across the region. Cardiovascular conditions account for the largest share of medical claims, followed by ear, nose and throat (ENT) or lung and respiratory ailments, and cancer. High blood pressure, insufficient physical activity and unhealthy dietary habits are also identified as important risk factors likely to drive future healthcare claims.

Around 87 per cent of employers are expected to introduce or depend on employee wellbeing programmes in 2027 as a way to control healthcare costs. Additionally, approximately two-thirds are likely to adopt flexible benefits to limit expenses. This reflects an increasing emphasis on tailoring employee benefits to different workforce requirements while keeping costs under control.